News

GBTA chief weighs in on March 1 sequester

Thursday, February 28, 2013

Economists, businesses and the public are anxiously awaiting news of whether President Barack Obama can hammer out a deal with Congressional Republicans to avoid the mandatory spending cuts known as "the sequester" by March 1. The threat of reductions in federal spending has serious implications for many sectors, including the military and homeland security, commercial aviation sector and public welfare programs. Although some experts remain optimistic that a compromise will be reached before the deadline, others have warned of the potentially devastating consequences the sequester could have on the nation's economy. One such individual is Michael McCormick, president and chief executive officer of the Global Business Travel Association (GBTA).

A serious setback
In a prepared statement, McCormick warned of the dangers the sequester poses to business growth. The implications of significant reductions in Federal Aviation Administration (FAA) personnel could have a substantial impact on business travel, both domestically and internationally.

"While the debate about the true impact on agency services rages, even the potential for significant disruptions in air travel is seriously disruptive to businesses," said McCormick. "This is bad news for the millions of business travelers each month - people working to secure new business opportunities, maintain existing partnerships, increase profits for their companies, and grow overall employment."

McCormick urged members of Congress to work together, and emphasized the urgent need for a responsible approach to solving the mandatory spending cuts issue. He added that while it was crucial to avoid the sequester by March 1, it was equally important for elected officials to ensure that the federal government is funded appropriately during the next seven months.

Flying blind
Should the sequester be unavoidable, the FAA will face serious challenges. Earlier this month, Transportation Secretary Ray LaHood said that the cuts would necessitate the closure of several air traffic control towers at smaller airports across the country, the furloughing of Transportation Security Administration personnel, and the elimination of overnight shifts for aviation workers at 60 airports nationwide. However, according to The New York Times, the situation may be worse than some people initially anticipated.

"The most frustrated folks right now are business travelers, who expect a certain amount of predictability going through the system," Geoff Freeman, chief operating officer of the U.S. Travel Association, told the news source. "Travel could very easily become the face of the sequester."

Officials from several major U.S. airlines said it was too soon to speculate on how individual carriers would respond to the sequester, but many experts in the aviation industry agree that the effects could have serious implications on overall economic growth.

The sequester is also likely to affect inbound travel to the U.S., as well as domestic air travel. Greeley Koch, executive director of the Association of Corporate Travel Executives, told the news source that lengthy delays at airports across the country could deter international executives from around the world from traveling to the U.S. on business. Over time, this could have a cumulative effect, potentially weakening economic ties to established trade partners in Europe and emerging markets in Asia.

Preparing for the inevitable
According to The Washington Post, several airlines and trade unions have already begun to brace for the impact of the sequester. The National Air Traffic Controllers Association said the public could feel the effects of the cuts as early as mid-April, and officials at the Regional Airline Association warned that smaller cities that rely on localized airports would be hit particularly hard.

Finding a reasonably priced - and punctual - flight could soon become much more challenging. Executives who want to reduce the stress and inconvenience of business travel may want to explore alternatives to chain hotels, such as serviced apartments and corporate housing.

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